Thematic programme for 2019

Supervision Examination Unit led examinations

In 2019 our Supervision Examination Unit committed to undertake the following thematic examinations.

Quarter 1 - Outsourcing arrangements

This was a continuation of the thematic examination which we started in Quarter 4 of 2018 and included finalising fieldwork and reporting on any findings.

We published detailed information relating to this theme in an Industry update in August 2018.

Quarter 2 - The role of the money laundering reporting officer (MLRO)

A MLRO plays a vitally important role in ensuring that not only the registered (or relevant) person complies with Jersey’s AML/CFT legislative and regulatory framework but also protects the Island’s reputation as an international finance centre, with high regulatory standards in countering financial crime locally and elsewhere.

In this thematic we therefore considered:

• How the registered (or relevant) person exercised appropriate governance, control, oversight and support of the MLRO. For example, did the MLRO have appropriate independence? Did they have sufficient seniority and authority within the business? Did they fulfil other operational roles within the business and, if so, how was that being managed to ensure it did not impinge on their ability to effectively fulfil their role as an MLRO? Was an independent check on the performance of the MLRO conducted?
• How the MLRO discharged their obligations under the AML/CFT legislative and regulatory framework. This included, but wasn't limited to, looking at whether all internal SARs were assessed on a timely basis; that the decision of whether or not to externalise a SAR was always documented appropriately; and that externalised SARs contained all the relevant information.

Quarter 3 - Reliance

In May 2016, MONEYVAL issued a report summarising Jersey’s position against the 40 Financial Action Task Force (FATF) recommendations (2003) and nine special recommendations (2004).

Jersey received a “partially compliant” rating against Recommendation 9 – “reliance” and concerns were raised around effectiveness.

Conducting this thematic will give us a better understanding of the current use of “reliance” across all sectors and we will check adherence to the requirements of Article 16 and 16A of the Money Laundering (Jersey) Order 2008 and the AML/CFT Handbooks.

Quarter 4 - Compliance monitoring

We consider compliance monitoring to be the assessment of a registered person’s adherence to applicable legislative and regulatory requirements and corresponding controls, and should therefore be an integral part of a registered person’s risk management framework.

Despite the JFSC issuing previous guidance in relation to compliance monitoring, a repeat finding in recent supervisory examinations (both thematic and entity risk) has been registered persons being unable to evidence full compliance with the requirements of the Code in respect of this important principle.

In this identified thematic we will therefore test the governance and oversight of the compliance function by the senior management of the registered person and the adequacy and effectiveness of compliance monitoring carried out by the compliance function/compliance officer.

As necessary, we may supplement the above identified themes by additional themed examinations, as required. One such theme is cyber security and sector specific supervisors will lead a pilot thematic on this during 2019. We will issue further information on this theme in due course.

Whilst the Quarter 2 Thematic will be led by the Supervision Examination Unit, it will also include other members of our Supervision team who are responsible for the supervision of designated non-financial businesses or professions (DNFPBs).

See our guidance on compliance monitoring.